Turkey: New hope for corporate bonds
Turkish regulators have eased issuance criteria in an attempt to breathe some life into the country’s moribund corporate bond market. At the end of January the Capital Markets Board (SPK) slashed the red tape governing the structuring and timing of corporate bond issuance as fears grew that Turkish corporates would face growing difficulties in rolling over or securing fresh debt in the international syndicated loan markets, which in recent years have been the traditional source of funding for many of the country’s firms.
Once they have secured SPK approval, corporates can issue bonds just one business day after they have published details of the issue online. This acceleration of the new-issue process is seen as increasingly vital if corporates are to secure timely funding to help them meet outstanding obligations.
The minimum permissible tenor has been cut to 12 months from two years, with no maximum maturity. Under the new issuance regime corporates would also be able to issue convertible bonds without the need to make a public offering.
Ozgur Guneri, executive vice-president of Finans Asset Management, says the new measures reflect the regulator’s increasingly market-savvy attitude. "The SPK has been very keen on new projects and developments. For example, it was very supportive when we were launching our exchange traded funds." Over the past five years Finans Asset Management has introduced exchange-traded funds covering the commodities, equity and fixed-income markets in Turkey.
But while the support of the SPK is regarded as a step in the right direction, local market participants believe it will be some time before conditions are right for the development of a thriving new-issue and secondary trading market.